Sign of the Financial Industry Regulatory Authority

Steven Robert Luftschein (also known as Steven Lerner) a stockbroker formerly registered with Aegis Capital Corp has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member according to an Order Accepting Offer of Settlement issued by FINRA Office of Hearing Officers who found that Luftschein had churned customers’ accounts and had made unauthorized trades. Department of Enforcement v. Steven Robert Luftschein Disciplinary Proceeding No. 2016051704303 (Jan. 13, 2021).

According to the Order, during the period that Luftschein was associated with Aegis Capital Corp, he effected trades in three customers’ accounts on an excessive basis. Between July of 2014 and June of 2016, a total of 430 trades were initiated by the stockbroker. These transactions caused customers’ accounts to contain annual cost-to-equity ratios that ranged between 35.6 and 123.8 percent and annual turnover rates that ranged between 12.5 and 96.3.

The Order indicated that Luftschein’s churning and unsuitable trading led the customers to collectively experience $261,000.00 in losses. FINRA noted that Luftschein took in a substantial amount of the $136,200.00 in commissions that had been generated from his excessive trading. Luftschein failed to have an adequate foundation to conclude that his trading was suitable for customers.

The regulator revealed that Luftschein defrauded customers in part through intentionally causing them to experience high-cost trades in their accounts. The costs of those trades had been concealed from customers and made it nearly impossible for customers to experience a profit. The AWC indicated that the stockbroker’s goal was to maximize his commissions without regard for his customers’ interests. FINRA determined that Luftschein violated Securities Exchange Act of 1934, Securities and Exchange Commission (SEC) Rule 10b-5, and FINRA Rules 2010, 2020 and 2111.

FINRA also revealed that 88 trades were made by Luftschein without getting permission from customers beforehand. The transactions had a principal value of $3,100,000.00. Luftschein’s unauthorized trading was violative of FINRA Rule 2010.

FINRA Public Disclosure confirms that Luftschein has been identified in 17 customer initiated investment related disputes concerning accusations of his indiscretions while employed by securities broker dealers including Aegis. On January 22, 2019, a customer initiated investment related FINRA securities arbitration claim concerning Luftschein’s conduct was settled for $132,500.00 in damages supported by allegations of breach of fiduciary duty and breach of contract as it pertained to the customer’s Aegis account. FINRA Arbitration No. 18-01797. The claim alleges that the customer’s account had been churned and exposed to the stockbroker’s negligence resulting in damages.

Luftschein is also referenced in a customer initiated investment related FINRA securities arbitration claim which was resolved for $569,962.38 in damages founded on accusations that investment recommendations were not suitable and that unauthorized trades were executed in the customer’s account during the time that Luftschein was associated with Aegis. FINRA Arbitration No. 18-00408 (May. 30, 2019).

On January 13, 2020, another customer filed an investment related FINRA securities arbitration claim involving Luftschein’s activities in which the customer sought $200,000.00 in damages based upon allegations of misleading and false statements being made by Luftschein. FINRA Arbitration No. 19-03414 (Dec. 6, 2019). According to the claim, trades were both excessive and unsuitable for the customer and had resulted in damages.